Apple Inc.’s (AAPL - Get Rating) market dominance in the tech space is unparalleled. Continued innovations and improving business fundamentals helped the stock advance by 45.9% over the past year to close yesterday’s trading session at $133.70. However, lately, the company has been making headlines for all the wrong reasons. Democratic Representative David Cicilline, who is leading a push to pass new regulations for U.S. technology companies, said this month that AAPL would be prohibited under antitrust reform legislation from giving its own apps an advantage by preventing users from removing them on AAPL devices.

Image Source: Unsplash

While the company has yet to resolve its case with ‘Fortnite’ creator Epic Games, its market dominance is being scrutinized by the Bundeskartellamt, Germany’s antitrust regulator, and a French court has set September 17 as the date for hearing a case against AAPL brought by France’s finance ministry for allegedly abusive contractual terms imposed by the tech giant for selling software on its App Store. Given these developments, AAPL’s shares look overvalued at their current price. Their forward EV/S and P/S of 6.12x and 6.30x, respectively, are higher than the 4.26x and 4.03x industry averages. So, we think it’s better to wait for a better entry point in the stock.

However, we think investors seeking to capitalize on the renewed investors’ interest in the tech space could bet on quality tech stocks SAP SE (SAP - Get Rating) and Broadcom Inc. (AVGO - Get Rating). They are trading at reasonable valuations and these stocks are expected to continue gaining in the coming months on their solid financials and impressive growth prospects.

Broadcom Inc. (AVGO - Get Rating)

AVGO designs, develops, and supplies semiconductor and infrastructure software solutions. The company operates through two segments: Semiconductor Solutions and Infrastructure Software. It provides semiconductor solutions for managing the movement of data in data centers, telecom, enterprise, and embedded networking applications.

For its fiscal second quarter, ended May 2, 2021, AVGO’s total revenue increased 15.1% year-over-year to $6.61 billion. Its non-GAAP net income increased 28.3% from the same period last year to $2.98 billion. Furthermore, its non-GAAP EPS came in at $6.62 for the quarter, up 28.8% year-over-year.

In terms of forwarding non-GAAP P/E, AVGO is currently trading at 16.92x, which is 34.9% lower than the 26.01x industry average. Its 13.63x forward EV/EBITDA is 18.9% lower than the 16.80x industry average.

The company’s EPS and revenue are expected to increase 24.2% and 14.1%, respectively, year-over-year to $27.53 and $27.25 billion in 2021. AVGO has surpassed consensus EPS estimates in each of the trailing four quarters.

On June 15,  AVGO announced new, industry-first capabilities for Value Stream Management (VSM) in its ValueOps software portfolio that seamlessly combine the investment planning features of Clarity with the advanced Agile management capabilities of Rally software. AVGO is expected to witness increasing demand for this solution because it encompasses metrics and capabilities that matter to most business leaders. The stock has gained 49.9% over the past year to close yesterday’s trading session at $466.66.

AVGO’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

The stock has a B grade for Sentiment, Stability, Growth, and Quality. Click here to access AVGO’s ratings for Momentum and Value also. AVGO is ranked #2 of 98 stocks in the B-rated Semiconductor & Wireless Chip industry.

SAP SE (SAP - Get Rating)

Headquartered in Walldorf, Germany, SAP is an enterprise application software company. SAP  operates worldwide through three segments: Applications, Technology & Services, and  SAP Business Network. Its offerings include SAP S/4HANA, SAP Intelligent Asset Management, and SAP Ariba.

SAP’s IFRS cloud revenue was  €2.15 billion ($2.57 billion) for the first quarter, which ended March 31, 2021, which represents a 6.7% year-over-year rise. The company’s IFRS profit after tax was  €1.07 billion ($1.28 billion), up 31.9% year-over-year. Its IFRS EPS for the quarter came in at €0.88 ($1.05), up 29.4% year-over-year.

In terms of forwarding non-GAAP P/E, SAP is currently trading at 21.68x, which is 16.6% lower than the 26.01x industry average. The stock’s 15.71x forward EV/EBITDA is also lower than the 16.80x industry average.

SAP’s EPS is expected to increase 6.6% year-over-year to $1.46 for the current quarter, ending June 30. It surpassed consensus EPS estimates in each of the trailing four quarters. Analysts expect SAP’s revenue to be $33.83 billion in its fiscal year 2022, which represents a 3.8% year-over-year rise.

On June 2, SAP took its first step toward creating the world’s largest business network with SAP Business Network, which will bring together Ariba Network, SAP Logistics Business Network, and SAP Asset Intelligence Network. SAP also announced new innovations designed to help companies modernize and digitalize their business processes to become intelligent enterprises. The stock has gained 13.4% over the past three months to close yesterday’s trading session at $138.71.

It’s no surprise that SAP has an overall A rating, which equates to Strong Buy in our POWR Ratings system. The stock has an A grade for Sentiment and a B grade for Stability, Value, and Quality.

Click here to see the additional POWR Ratings for SAP (Momentum and Growth). SAP is ranked #3 of 128 stocks in the Software-Application industry.

Want More Great Investing Ideas?

7 SEVERELY Undervalued Stocks

9 "Must Own" Growth Stocks for 2021

Stock Market Outlook for 2nd Half of 2021

5 Ways to Beat the S&P 500